BRAZZAVILLE IN BRIEF, FEBRUARY 3, 2010

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SUBJECT: BRAZZAVILLE IN BRIEF, FEBRUARY 3, 2010

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CONTENTS



--Congo Achieves Debt Relief

--Chevron Employees Released

--Brazzaville Hosts Two Conferences

--CEMAC - What's This About a New Airline?

--Hydropower Comes to Brazzaville

--Congo Plans for Fiftieth Anniversary Celebration





Congo Achieves Debt Relief

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1. (U) Christmas came late to Congo, as the World Bank and IMF
announced January 28 that Congo(B) had achieved HIPC "completion
point," a significant step toward debt relief for the country.
According to the IMF and World Bank, the decision will generate
total debt service savings of USD 1.9 billion, including USD 1.7
billion from the Enhanced HIPC countries and USD 201.3 million
from the Multilateral Debt Relief Initiative. This represents
President Sassou's top policy objective since his reelection in
July 2009, and he asked the IMF to delay its public announcement
long enough for him to make the announcement to his cabinet
earlier the same day. The next step in the debt relief process
will be a formal review of Congo's debt by the Paris Club.




2. (SBU) IMF mission chief for the Congo Robert York noted in
the IMF's public statement that it will be important for Congo
to "maintain a sustainable external and domestic debt position
through careful borrowing and prudent fiscal policy." In theory,
this should not be difficult for oil-producing Congo, which is
setting aside USD 3.1 billion or half of its 2010 anticipated
revenue toward future needs rather than spend it this year.
This also may be a reference to anticipated public pressure to
spend: Several public service unions are pressing the
government to revise the "social truce" that has been in effect
since the HIPC discussion started and which has limited public
sector salary increases. Most observers assume that pay hikes
will come - that it is simply a question of how much and when.




3. (SBU) The performance of Sassou's government should now be
measured, in part, by the extent to which it follows through on
reforms undertaken at the behest of the World Bank and IMF in
order to achieve debt relief. The most important of these were
intended to improve the transparency of Congo's oil sector, and
resulted in the first successful audit of oil revenues, as well
as the implementation of new accounting systems and auditing
standards. Congo also standardized the process through which it
sells oil (and closed Cotrade, which previously existed as a
ssubsidiary of the national oil company for the sole purpose of
selling oil, and was headed by President Sassou's son). There
were also important reforms to combat corruption (an
anti-corruption commission was created) as well as in government
procurement, the forestry sector, and the education sector.
(Note: In its report, the IMF accepted at face value the
government's previous practice of selling oil through
intermediaries, which the government claims was necessary to
hide revenues from vulture funds, but left the door open to
significant diversion of funds. These practices have now ended
as a result of the reforms undertaken during the HIPC process,
but it will be critical to watch the extent to which the
government follows the new procedures. End note.)



Chevron Employees Released

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4. (SBU) Following the discovery of a theft of USD 10 million
from its downstream gasoline/diesel retail operation (a dozen or
so gas stations previously operated under the Texaco logo in
Congo, recently sold to the Congolese national oil company),
there is a nasty fight under way between Chevron and
French-owned BCI bank over the matter. According to Chevron,
several of its former employees were involved in the fraud and
Chevron believes that there is a strong possibility of collusion
by BCI employees, since 22 of 24 of the fraudulent transactions
involved went through BCI bank, including one in which an
individual was allowed to cash a Chevron check for around USD
$250,000, leaving the bank with the money in a suitcase.
Chevron contacted authorities in Pointe-Noire, who began an
enthusiastic investigation of the case, resulting in three
arrests and the identification of another suspect believed to
have fled the country.




5. (SBU) However, for reasons that are not clear to us, BCI
approached prosecutors in Brazzaville, who opened a competing
investigation with a completely different narrative, i.e. that
BCI was wronged by false accusations by Chevron. Net result:
at the behest of BCI, the Chevron employees who uncovered the
fraud were jailed in December by the Brazzaville court.
(Comment: That's right, the good guys, according to Chevron, who
were not even employed in the Congo during the entire period of
the thefts. End comment.)




6. (SBU) Last week, these two employees (one Mauritian and the
other Franco-Mauritian) were released on a bail of USD 250,000
(posted by Chevron) following the visit of a special envoy from
the Prime Minister of Mauritius. Chevron is in crisis response
mode and has sent a team here from corporate headquarters,
security and the regional office of Chevron downstream to try to
get the distressed two employees out of the country and back to
their families as quickly as possible. Congo's judiciary is
reported to be in the process of identifying a senior judge to
take over the two competing cases, which should help resolve the
legal struggle between Chevron and BCI. (Comment: Since the
national oil company now owns the former Texaco operation - and
is satisfied with the terms of its acquisition - it is not clear
what BCI gains from a protracted legal battle, but it will
likely take some more time to untangle all of the judicial and
political angles to this case. End comment. )



Brazzaville Hosts Two Conferences

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7. (U) Brazzaville is the location for two conferences of note
in February. From February 2-4 COMIFAC (Commission for Central
African Forests) and the FAO are co-hosting a conference on
carbon monitoring in the Congo basin. American NGO Wildlife
Conservation Society (WCS),which has a large program in Congo
funded in part by USAID and US Fish and Wildlife, has sent a
team of experts to discuss measurement and protection of carbon
stocks. Over 150 participants from around the world are slated
to attend the conference. American organizations sending
representatives include USAID, the US Forest Service, NASA, the
Woods Hole Research Center, the University of Maryland, UCLA,
South Dakota State University, WCS, and WWF.




8. (U) From February 15-17, USAID and WHO/AFRO (which is
headquartered in Brazzaville) will be meeting to discuss an
emerging pandemic threats (EPT) program funded by USAID. WCS,
which has received funding from USAID to study linkages between
human and animal diseases, will also participate in this
program.



CEMAC - What's This About a New Airline?

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9. (SBU) The Bangui meeting of Central African Economic Monetary
Community (CEMAC) January 15-17 was notable in Brazzaville for

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several reasons, not least that President Sassou assumed the
rotating presidency from CAR President Bozize. Congolese media
also noted the growing economic and political influence of
Equatorial Guinea, which will assume the governorship of Central
African Bank (BEAC) for the next five years. Perhaps most
notable for general audiences, however, was the proposal for
CEMAC to create a regional airline in partnership with South
African Airways (SAA). CEMAC officials hope that the airline
will operate five planes and serve as a link between central
African states, which are currently somewhat cut off from each
other due to a lack of transportation options. (Note: CEMAC
representatives here in Brazzaville confirmed that SAA would
have an ownership stake in the airline, but we would want to see
further confirmation of this agreement before putting too much
stock in it; SAA does not have an office in Brazzaville. End
note.)




10. (SBU) Comment: While it is certainly true that air travel
between the capitals of central African states is a challenge,
CEMAC officials would be well advised not to forget Air Afrique,
which existed to provide a link between African countries but
was not commercially viable and went bankrupt in the 1990s. We
note also that though the airline is supposed to be
headquartered in Brazzaville, there are also supposed to be two
"important offices" in Libreville and Yaounde, which looks a lot
like an enterprise that will be run politically, not
economically. End comment.



Hydropower Comes to Brazzaville

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11. (U) President Sassou cut the symbolic ribbon January 27 on a
$280 million hydroelectric dam at Imboulou, 200 kilometers north
of Brazzaville on the Lefini River, a tributary of the Congo
River. The first 30 megawatt turbine out of four (for a total
capacity of 120 megawatts) has just been completed after five
years of work. The $280 million project is fully financed and
constructed by China and is expected to be completed in 2015.
The government hopes that the first electrical power generated
by the dam will reach Brazzaville by March 2010; the power
transmission line remains to be completed.



Congo Plans for Fiftieth Anniversary Celebration

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12. (U) Congo will celebrate fifty years of independence on
August 15, 2010, and President Sassou has appointed a
hundred-person commission to organize the event. Minister of
State for Basic Infrastructure Isidor Mvouba will chair the
commission and its ten sub-commissions. (Comment: We anticipate
that the government, flush with oil money and having just
achieved debt relief, will put a lot of resources into the
celebration. President Sassou will also use the next six months
to highlight projects - such as the hydroelectric dam - that
demonstrate development undertaken under his watch. If the
independence celebration is anything like the inauguration,
members of the commission will compete heavily with one another
in order to demonstrate their loyalty. It'll certainly be a big
show. End comment.)
EASTHAM